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EMMPRESA CUBANA DEL TABACO v. CULBRO CORPORATION
June 26, 2002
EMMPRESA CUBANA DEL TABACO, D.B.A. CUBATABACO, PLAINTIFF, AGAINST CULBRO CORPORATION AND GENERAL CIGAR CO., INC., DEFENDANTS.
The opinion of the court was delivered by: Robert W. Sweet, United States District Judge
Defendants General Cigar Holdings, Inc. (the legal successor in
interest to named defendant Culbro Corporation) and General Cigar Co.
Inc. (collectively "General Cigar") have moved pursuant to Rule 56 of the
Federal Rules of Civil Procedure for summary judgment to dismiss the
complaint of plaintiff Empresa Cubana del Tabaco d.b.a. Cubatabaco
("Cubatabaco") on the basis of estoppel, acquiescence, and laches due to
Cubatabaco's alleged long delay in challenging General Cigar's use and
registrations of the COHIBA trademark. Cubatabaco has moved (1) to strike
General Cigar's affirmative defenses of estoppel, acquiescence, and
laches; and (2) for partial summary judgment on its claims of abandonment
and under Articles 7 and 8 of the General Inter-American Convention for
Trademark and Commercial Protection ("IAC" or "Inter-American
Convention"), Article 6bis of the Paris Convention for the Protection of
Industrial Property ("Paris Convention"), New York common law, and the
Trademark Dilution Act.
For the following reasons, these motions are denied in part and granted
Cubatabaco is a company organized under the laws of Cuba with its
principal place of business in Havana, Cuba. Directly, and through its
licensee, Habanos, S.A., Cubatabaco exports tobacco products from Cuba
throughout the world, excluding the United States because of the current
trade embargo. It was established by the Cuban government as an
independent entity with its own assets and administration and is subject
to the jurisdiction of a Cuban ministry.
Culbro has been merged into and is survived by General Cigar Holdings,
Inc. General Cigar Holdings is a Delaware corporation with its principal
place of business in the county of New York and functions as a holding
company for General Cigar Co. Inc.
General Cigar Co. is a Delaware corporation with its principal place of
business in Bloomfield, Connecticut. General Cigar Co. is in the business
of manufacturing, marketing, advertising and distributing tobacco.
General Cigar and its predecessors in interest have been major U.S.
manufacturers and distributors of cigars for more than a century.
Cubatabaco filed its complaint on November 12, 1997, alleging that
Cubatabaco possessed a COHIBA mark for its cigars that was "well-known"
in the United States at the relevant time, and that General Cigar's
efforts to exploit and trade upon Cubatabaco's COHIBA mark in order to
generate profits on the sale of its own cigars entitled Cubatabaco to
relief under the Paris Convention, Arts. 6bis and 10bis; the
Inter-American Convention, Arts. 7, 8, 20 and 21; section 43(a) of the
Lanham Act, 15 U.S.C. § 1125(c)(1) and 1125(a); and New York State
On December 11, 1997, the parties in settlement discussions entered
into a written agreement that, inter alia, (1) the actions of both
parties in this court and in the U.S. Patent and Trademark Office ("PTO")
are "stopped"; (2) "the time spent during the negotiation will not be
used by any of the parties to the detriment of the other, in case there
is no [settlement] agreement;" and (3) "use of General Cigar's COHIBA
trademark as from the signing of this Contract will not be used in
detriment of Cubatabaco if agreement is not reached." The parties
reported this agreement to the Court on December 16, 1997, and, at their
request, all proceedings were stayed, including discovery, until
litigation was renewed in February 2000.
By order dated December 5, 2000, Counts V (Article 22 of TRIPS), VI
(Article 10 of the Paris Convention), VIII (false representation of
origin in violation of Section 43(a) of the Lanham Act) and IX (deceptive
advertising in violation of Section 43(a) of the Lanham Act) were
dismissed with prejudice in light of the decision in Havana Club Holding
S.A. v. Galleon S.A., 203 F.3d 116, 124 (2d Cir. 2000).
General Cigar filed the instant motion for summary judgment on the
basis of its equitable defenses on November 29, 2001. On January 29,
2002, Cubatabaco filed its motions for summary judgment to dismiss
General Cigar's equitable defenses and for summary judgment on its claims
under Articles 7 and 8 of the IAC; Article 6bis of the Paris Convention;
the Federal Trademark Dilution Act; and New York common law. The motions
were heard on March 13, 2002, and were considered fully submitted at that
The following facts are taken from the parties' Rule 56.1 statements*fn1
and, as required, are construed in the light most favorable to the
non-movant, as applicable. They do not constitute findings of fact by the
Throughout the 1970's, Cuban COHIBA cigars were commercially available
and sold in Cuba at Havana's main hotels, upscale restaurants and two
retail outlets. From 1970 to 1975, Cubatabaco claims that annual sales at
the two retail outlets in Havana averaged approximately 100,000 cigars
and increased to approximately 180,000 cigars per year by 1975. In
addition, since at least 1970, COHIBA cigars had been sold to the Cuban
Council of State, which includes the office of the Cuban President and to
another Cuban state enterprise which in turn sold the cigars to Cuban
Ministries and other government institutions.*fn2 Cubatabaco claims that
the total volume of sales grew from approximately 350,000 to 375,000 per
year from 1970 to 1975 to approximately 550,000 to 600,000 per year from
1975 to 1980. There are no records of these sales, however, as Cubatabaco
has a policy of destroying its sales and production records after five
On November 15, 1977, Forbes magazine published an article on the
impact of Cuban cigars on the U.S. industry that noted that Cubatabaco
was developing a Cohiba cigar. General Cigar's principal executives read
By January 1978, Cubatabaco had made application to register COHIBA in
17 countries, including most of the Western European countries.*fn3 The
applied-for registrations issued in due course. Cubatabaco did not,
however, sell COHIBA cigars outside of Cuba until 1982.
On February 6, 1978, a New York magazine article featured Cubatabaco
and COHIBA cigars. In the article, Cubatabaco commented that it would be
commercially possible for Cubatabaco to sell cigars in the United States
successfully under new brands if, as it appeared to be the case, it would
not be able to sell under the historic trademarks it preferred as a
result of the Menendez litigation, which is described infra in Part III.
Cubatabaco stated, "We have the unassailable trademark . . . the one
which says `Havana' or `Made in Cuba,' and that is the only one we
The Miami Herald's Sunday magazine, Tropic, also reported on the COHIBA
cigar on March 19, 1978.
In July 1981, Cubatabaco announced that it would soon begin commercial
exports of COHIBA in Cubatabaco International (July-December 1981),
published in English for the foreign cigar trade. The COHIBA cigar was on
the issue's front cover. In this publication, Cubatabaco expressly
positioned COHIBA as the pinnacle of Cuban cigars.
In January 1982, The Spanish trade publication, Actualidad Tabquera
reported that Cuba would soon begin international sales of the "famous
cigar Cohiba." In June 1982, El Pais, a general circulation paper,
reported on the imminent arrival of COHIBA in Spain.
On June 30, 1982, Cubatabaco launched COHIBA's international commercial
sales at an event in Madrid during the World Cup.
In 1983, Cubatabaco sought to register the COHIBA mark in the United
States for the first time. In August 1984, its United States attorneys
(Lackenbach, Siegal, Marzullo, Pesa & Aronson ("Lackenbach")) informed
Cubatabaco that General Cigar had already obtained the registration on
February 17, 1981.
On February 22, 1985, Cubatabaco filed an application with the PTO to
register in the United States the BEHIQUE mark with the same trade dress
it used on COHIBA cigars.*fn4
In 1987, Cubatabaco sought and obtained an opinion from Lackenbach on
whether to begin legal proceedings over the COHIBA registration.
Thereafter, Cubatabaco learned that General Cigar had filed a Declaration
of Use and Incontestability for its COHIBA registration under Sections 8
and 15 of the Lanham Act in 1986 in connection with its 1981 registration
for COHIBA. Cubatabaco chose not to take any action against General
In a November 1992 interview with Padron, published in the Spring 1993
Cigar Aficionado, Francisco Padron, director of Cubatabaco, replied to a
question regarding the company's future strategy for Cuban cigars. The
magazine included the following purported exchange:
CA: Many American smokers don't realize that there
are two brands of Partagas, a Partagas in
America from the Dominican Republic and a
Partagas sold around the world from Cuba.
Assuming that tomorrow the embargo was lifted,
how would it work?
Padron: We are not going to have two brands over
there. Not even in Europe. We decided to
break off our deal with Davidoff because of
that. So what would happen is that we would
launch new things for the North American
market, new brands. Or we could make an
arrangement with the brand owners there.
CA: General Cigar, as an example, owns the brand names
Partagas, Ramon Allones and Cohiba for the U.S.
market, and it has tremendous distribution in the
United States. I would imagine that they would
love to sit down with you and work it out to
represent those brands of Cuban cigars in
America. Is this possible or a problem? You are
shaking your head no.
Padron: The first condition is that they must pass the
brand name to us. This is the first condition
Immediately. If not, forget about it. Second
condition, they must be our partner the same
way that we have it with the rest of the
world. There is no other way to make a deal
with us. If not, forget about it.
We want to have [a] Habano cigar, not a brand name. It
doesn't matter if it is Bolivar, Montecristo or even
Cohiba. For the last four years, we have been telling
the connoisseur how to recognize a Havana. When we
launched the smoke ad we just put Havana, no Habanos.
We think the most important thing is the umbrella that
can cover all brand names. We can create a brand name
whenever we want.
II. General Cigar's 1981 Registration
General Cigar first learned of the name "COHIBA" in the late 1970's.
General Cigar executives had read the Forbes article discussed above. In
addition, a December 1977 internal memorandum refers to COHIBA as "sold
in Cuba/brand in Cuba" and "Castro's brand cigars."*fn5
In February 1978, General Cigar employee Oscar Boruchin ("Boruchin")
discussed the COHIBA brand with Edgar Cullman Jr. ("Cullman"), chairman
of Culbro. Boruchin purportedly had learned of COHIBA from a friend who
visited Cuba on behalf of the State Department during the Carter
Administration and was given COHIBA cigars in Cuba by "the highest
echelons of government."
On March 13, 1978, General Cigar filed an application to register
"Cohiba," with a claimed first use date of on or before February 13,
1978. Before or after pursuing this application, General Cigar did not
request counsel to conduct a trademark search in Cuba or
internationally, which would have disclosed the Cuban registrations.
There is evidence to suggest that such a search would not have been
industry practice in these circumstances.*fn6
It is a disputed issue as to whether the COHIBA name was well-known at
this time. Boruchin testified that he told Cullman that "[n]obody knew
the brand," and it was "not on the market," "didn't mean anything to
anybody," and was "just given to visitors, diplomats." Cubatabaco
states, however, COHIBA cigars were wellknown in the United States cigar
industry and among the public because of the two magazine articles
mentioning COHIBA. Further, numerous United States journalists, business
executives, and others knew of the brand from seeing it on sale in retail
outlets and hotels in Havana, from receiving it as gifts in Cuba and at
receptions in the United States, and by word of mouth.
On July 25, 1978, the U.S. Patent and Trademark Office ("PTO") asked
General Cigar "whether the term COHIBA has any meaning or significance in
the relevant trade or industry." General Cigar answered in the negative.
On March 20, 1979, the PTO, in another Office Action, noted, "Cohiba is
a geographical tobacco growing region of Cuba," and stated that the
COHIBA application would be refused as either geographically descriptive
or misdescriptive, depending on whether the goods were from Cohiba. In a
September 14, 1979 response, General Cigar asserted that COHIBA was
"wholly arbitrary" and "fanciful and arbitrary," which Cubatabaco claims
General Cigar clearly knew to be false.
III. The Growth of Parallel Brands as a Result of the Cuban Revolution
and Cuban Embargo
General Cigar alleges that COHIBA represents another example of a
"parallel brand" that resulted from the Cuban Revolution and the
On January 1, 1959, Fidel Castro seized control of the Cuban
government. The new government seized privately-owned cigar manufacturers
on September 15, 1960. Some of the ousted Cuban cigar owners
reestablished their businesses abroad using the trademarks their families
had owned before the government seizure.
In 1963, the U.S. government imposed an embargo on trade with Cuba,
prohibiting anyone subject to the jurisdiction of the U.S. from
transporting, importing or otherwise dealing in or engaging in any
transaction with respect to merchandise "of Cuban origin." 31 C.F.R.
§§ 515.101 et seq. (1999) (the "Embargo").
Although the embargo prevented Cuban entities such as Cubatabaco from
selling cigars and other Cuban products in the United States, it did not
prevent them from registering or protecting trademarks, trade dress and
other intellectual property in the United States. In fact, Cubatabaco has
aggressively protected its intellectual property in the United States.*fn8
In a series of cases in the 1960's and early 1970's (the "Menendez
litigation"), U.S. courts upheld rights of the former owners of Cuban
cigar trademarks in the United States against claims of the Cuban
government and governmental entities. The courts determined that the
owners of the expropriated Cuban cigar companies retained ownership of
the pre-expropriation common law trademark rights obtained by their
pre-expropriation sale of cigars in the United States under those
trademarks and the appurtenant good will. The courts so ruled on the
ground that the United States would not give extraterritorial effect to
takings without compensation and hence would not give legal effect to the
Cuban expropriations of the cigar companies as applied to trademark
registrations and common law rights existing in the United States at that
time. F. Palicio Compania, S.A. v. Brush, 256 F. Supp. 481 (S.D.N.Y.
1966), aff'd 375 F.2d 1011 (2d Cir. 1967); Menendez v. Faber, Coe &
Gregg, 345 F. Supp. 527 (S.D.N.Y. 1972), aff'd in part and rev'd in part
sub nom. Menendez v. Saks & Co., 485 F.2d 1355 (2d Cir. 1973), cert.
granted as to certain questions, 416 U.S. 981 (May 13, 1974); reargued
Jan. 19, 1975; rev'd in part and cert. controverted in part sub. nom.
Alfred Dunhill of London v. Republic of China, 425 U.S. 682 (1976).
COHIBA's situation is different from those of the brands in the
Menendez litigation, as the COHIBA brand was not originally a privately
owned company prior to the Revolution and embargo, nor was it sold in the
United States prior to that time. COHIBA therefore did not involve an
expropriated owner seeking to use its U.S. trademark while the Cuban
government continued to use the Cuban and other trademarks. It is true,
however, that the Cuban COHIBA is sold around the world and in Cuba,
while cigars under the same apparent mark are sold in the United States
by a different, unrelated entity.
IV. Sales of General Cigar's COHIBA-Branded Cigars From 1978 to 1997
From 1978 to 1997, General Cigar sold three different pre-existing
cigars — the White Owl, the Canario D'Oro, and the Temple Hall
as a "COHIBA cigar" by placing a COHIBA label on the cigars.
A. 1978-1982: COHIBA-Branded "White Owl" Cigars
Beginning in 1978, General Cigar shipped 1,000 or fewer COHIBA-branded
cigars per year.*fn9 The cigars were White Owl "stock" machine-made
cigars that were shipped along with other White Owl cigars (or other
"seconds") labeled with as many as 32 other different brands as part of a
"trademark maintenance program."
The cigars were irregularly and sporadically shipped to two retailers
who, by pre-arrangement, were given a full credit back on the nominal
payment they made to General Cigar. Two boxes of 50 cigars of each of the
33 brands were simultaneously shipped in identical cardboard boxes, with
stick-on labels affixed to two boxes for each of the 33 different
brands. These shipments were not sent out when "seconds" were not
The cardboard boxes with the different labels, including
"COHIBA," were sold in the same cartons they were in with a sign
stating the price per box. If the two boxes with the COHIBA label
were at the bottom of the box, they would not have been visible to
General Cigar sold the following amounts of COHIBA-branded White Owl
cigars during this period:
1982: 200 (single shipment on April 15, 1982)
B. 1982-1987: COHIBA-Branded "Canario D'Oro" Cigar
On June 23, 1986, General Cigar filed a sworn "Declaration Under
Sections 8 and 15 of the Trademark Act of 1946" for its COHIBA
registration, in which it attached a "specimen showing the mark as
currently used" (the packaging in which the Canario D'Oro was sold as of
November 1982). As part of the requirement to establish incontestability
under Section 15, General Cigar declared that "the mark shown therein has
been in continuous use in interstate commerce for five consecutive years
from February 17, 1981 to the present."
On November 3, 1986, the PTO granted "incontestability status" to
General Cigar's COHIBA mark.
Sales of the COHIBA-branded Canario D'Oro ceased sometime in 1987.
General Cigar sold the following amounts of COHIBA-branded Canario
D'Oro cigars during this period:
1982: 90,000 (Nov. and Dec. only)
C. Period of No Sales from 1987 to 1992
General Cigar itself*fn11 made no sales under the COHIBA name
for at least five years, from sometime in 1987 until November 20,
It is disputed whether during this time period General Cigar abandoned
its earlier registration of COHIBA or merely stopped selling a
lower-quality version in order to make plans for a higher priced,
General Cigar claims that it decided to convert COHIBA from a "bundled"
cigar into a premium cigar that would be sold in wooden boxes and used as
one of General Cigar's principal brands, and that it stopped shipping the
non-premium cigars from 1986 to 1992 to develop the premium brand of
COHIBA. Cubatabaco alleges, however, that General Cigar did not begin
working with an outside consultant to develop the premium COHIBA until
September 1992, six years later.
It is undisputed that the following events occurred during this time
In April 1989, General Cigar sought to use the word mark "COHIBA" in
conjunction with the identical copying of the Cuban COHIBA trade dress.
Counsel advised in July 1989 that the trade dress was already
registered, and based on this legal advice, General Cigar determined not
to use the identical trade dress.
On November 9, 1990, General Cigar sent a cease and desist letter,
asserting that the use of the name "COHOBA" for cigars infringed on
General Cigar's "considerable rights in [its 1981 COHIBA] registration."
In December 1991, General Cigar again considered using an element of
the Cuban COHIBA trade dress, the so-called "Indian Head" design. Outside
counsel advised against it, and in-house counsel informed the marketing
department that "We are out of luck on the use of the Indian Head
design." The outside counsel in April 1989 and December 1991, advised
General Cigar that either non-use or mere token use of a mark was
insufficient to sustain rights and would constitute abandonment.
D. 1992-1997: The COHIBA-Branded "Temple Hall" Cigar
On September 1, 1992, the premiere issue of Cigar Aficionado was
published, with a distribution of 115,000 copies*fn13 and display at 453
cigar outlets. The premier issue was introduced to the trade on August
27, 1992, at a breakfast held by Cigar Aficionado at the annual
convention of the Retailer Tobacco Dealers of America ("RTDA"), the
principal retailers' association. Complimentary copies of the premier
issue were distributed to the 300 to 400 attendees.
The issue featured the Cuban COHIBA in a six-page cover story about
"Cuba's Best Cigar," entitled "The legend of Cohiba: Cigar Lovers
Everywhere Dream of Cuba's Finest Cigar."*fn14 On September 21, 1992,
Newsweek ran an article on Cigar Aficionado's launch, noting that COHIBA
was the initial winner of the magazine's first "blind tastings" feature,
and that the first issue had featured ads for premium products such as
Glenlivet single-malt scotch, Louis Vuitton luggage "and, of course,
COHIBA cigars."*fn15 Cubatabaco claims that General Cigar decided in the
fall of 1992 to sell a new product under the COHIBA name "to somehow
capitalize on the success of the Cuban brand and especially at this point
in time the good ratings that it got, the notoriety that it got from
Cigar Aficionado." General Cigar states that it had always intended to
resume use of the COHIBA mark.
In September 1992, defendants began to work with an outside graphic
designer, Cliff Bachner ("Bachner") on the trade dress of the new
COHIBA. John Rano, General Cigar's head of marketing, instructed Bachner
to make "exactly same" copies of the Cuban COHIBA trade dress. Bachner
did as instructed, but General Cigar states that it never used those
prototypes in commerce.*fn16 Milstein, who was Assistant General Counsel
for General Cigar at that time, testified in deposition that General
Cigar wanted to use a label as near as possible to the Cuban COHIBA "for
the same reason they wanted to use it in `89 and again in `91," that is
"they wanted to somehow capitalize on the success of the Cuban brand, and
especially at this point in time the good ratings that it got, the
notoriety that it got from Cigar Aficionado." Milstein Dep. at 284.
In the first week of November 1992, Ron Milstein, General Cigar's then
Assistant General Counsel ("Milstein"), and Alfons Mayer, General Cigar's
Vice President for Tobacco ("Mayer"), traveled to Havana, Cuba, at the
invitation of Cubatabaco to attend an international conference in Havana
for the 500th anniversary of the European discovery of tobacco, which
included the launch of a new line of COHIBA cigars, "Siglo (Century)
1492." In a private meeting, Mayer informed Padron of General Cigar's
interest in entering into a broad and exclusive partnership with
Cubatabaco for the United States territory upon the embargo's end, which
would replicate the 51/49 partnership for distribution of Cuban cigars
that Cubatabaco had created in the rest of the world. COHIBA was not
mentioned during the meeting. Milstein wrote of the meeting:
We met with Mr. Padron for 1 hour over breakfast. The
talk was of the Consolidated sale rumor. We got no
more information. Mr. Padron made it very clear that
trademarks are not important. He said Havana will sell
cigars no matter what name they have. Any companies
that have marks (this was directed to G.C.) would have
to sell (give) the marks back to Cubatabaco and get
distributorship rights only, or else Cubatabaco will
sell the cigars under a new name.
While at the conference, Milstein was introduced to Adargelio Garrido,
a Cubatabaco attorney ("Garrido"). Milstein did not speak Spanish and
Garrido, a native Spanish speaker, had not studied English at the time.
General Cigar claims that a conversation took place between the two men.
The evidence of this meeting is a memorandum Milstein wrote two weeks
after the meeting.*fn17 Milstein wrote that Garrido "acknowledged that
we owned the name in the U.S. and that we would be free to sell a cigar
under that name there." Milstein's memorandum also indicated that Garrido
stated that Cubatabaco would object to any use General Cigar made of the
trade dress associated with Cubatabaco's COHIBA cigars. Cubatabaco raises
several objections to this evidence.*fn18
In November 1992, General Cigar began to sell a COHIBA cigar again by
relabeling its pre-existing "Temple Hall" cigar. This COHIBA was a
medium-priced cigar. General Cigar made no reference to its earlier
"COHIBA" product, and the trade dress was completely different. The
cigars were sold only at Alfred Dunhill of London, an upscale retailer
("Dunhill"), and Mike's Cigars, a Florida retailer, wholesaler, and
mail-order distributor. In 1992, General Cigar sold through ...